Jindal adviser: LSU privatization deals on track

Written by: Wire and Staff Reports

MELINDA DESLATTEAssociated Press

BATON ROUGE, La. (AP) - Gov. Bobby Jindal's top budget architect said Thursday the state will have enough money to cover the costs of privatizing nearly all of the LSU-run hospitals next year without shrinking services to the poor and uninsured.

Three deals have been signed, for the hospitals in New Orleans, Baton Rouge and Lafayette.

Commissioner of Administration Kristy Nichols said deals for six more hospitals - located in Houma, Bogalusa, Lake Charles, Shreveport, Monroe and Pineville - will be completed by the end of next month.

"Those deals are on schedule," she said in a conference call with reporters.

The hospitals, which are used to train many of the state's medical students, will all be under private management by Jan. 1, Nichols said. The only other university hospital, in Tangipahoa Parish, will remain under LSU control.

Nichols addressed questions raised by the Legislature's financial analysts about whether the 2013-14 budget will be short of the money needed to cover the privatization.

A recent presentation by the Legislative Fiscal Office said 94 percent of the dollars set aside by the Jindal administration for the deals had been used up with the first three privatization contracts signed.

Nichols said the administration was asking senators to amend the budget proposal to address the financing gap. She said anticipated lease payments, available state and local dollars and federal Medicaid money will close the shortfall that currently exists in next year's $25 billion budget.

With the changes, Nichols said the total operating budget for all LSU-affiliated hospitals and clinics will be $1 billion next year, an increase from the $955 million budget the facilities had at the start of the 2012-13 fiscal year.

Despite the increase in cost, Nichols said the state will net $100 million in savings next year because of lease payments the private hospital operators will make annually to take over the facilities.

"That's significant savings to the state," Nichols said.

However, that will be offset next year at least partially by one-time costs for termination pay and unemployment for laid off LSU hospital workers, who can reapply for their jobs with the new hospital operators. Analysts for the Legislature have pegged the layoff costs at $42 million so far, and said another $15 million could still be looming.

Nichols said the state will have other lowered costs long-term on maintenance and state employee retirement. The private entities that are taking over management of the hospitals and clinics also will take over maintenance of the facilities, she said.

Three privatization contracts have been signed.

In New Orleans and Lafayette, private hospital operators will take over LSU hospital management on June 24. In Baton Rouge, the LSU hospital was shuttered last month, with most of its services transferred to a private hospital in the city.

Five more contracts are slated for consideration by the LSU Board of Supervisors next week.

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